Roadmap to Achieve 70 Percent Employment

“The government will open a new era of people’s happiness in which jobs are available to everyone who wants to work”

The Korean government announced the 70 percent Employment Roadmap at the Cabinet Meeting chaired by Prime Minister Chung Hongwon on June 4.  The roadmap is aimed at increasing the size of the middle class to 70 percent by raising the employment rate to 70 percent. 

The Korean government recognizes it as its biggest responsibility to create as many jobs as anyone who wants to work can easily find one, and also recognizes it as its biggest concern to increase the employment rate as the economy is faced with low birth rates and aging population.

Background

The Korean economy has seen “growth without employment” since the 1990’s.  Furthermore, the growth rate has gradually been slowed, and the employment rate stayed in the 63 to 64 percent range since 2003. 

The export and manufacturing-oriented economic structure weakened job creating capacities, and SMEs and service industries, which account for most of employment, have suffered from low productivity.  Most jobs are dominated by males working long hours, and this has been an obstacle to job creation.

Factors negatively affecting employment are difficulties faced by females workers when they want to be reemployed, youths receiving higher education and early retirement of baby boomers.  These factors make it fundamentally difficult to achieve 70 percent employment.  Since economic growth prospects are uncertain, the Korean economy needs to innovate a new paradigm for job creation. 

Against this backdrop, the Korean government has drawn up the 70 percent Employment Roadmap.  The roadmap has been designed to move the main axis of employment from the male labor force working long hours in large manufactures to the female labor force employed by SMEs or working in the service sector.  The roadmap has been designed to create a family-friendly environment where reduced work hours are possible along with part time employment and other various types of employment.  The roadmap has been designed to induce tripartite job creation efforts by government, industry and labor. 

The Roadmap

The roadmap aims to create a total of 2.38 million jobs, 476,000 every year, by 2017.  To achieve this goal, 34 related laws will be enacted or revised, including the Service Industry Development Act, and 136 action plans will be prepared by 13 ministries.  The government will also work on reducing working hours by 200 hours. 

1) Job Creation by Promoting a Creative Economy

Business Startup

Startup business funding systems, which have been loan-centered, will be reformed to investment centered*.  The government will promote M&As, while abolishing the joint surety system.

* The government announced the Measures to Develop Venture Startup Funding Ecosystem on May 15

The government will launch the Idea Rich National Startup Project, to help develop ideas of ordinary people to be commercialized through R&D and by obtaining patents.

New professions and new industries

The government will form a task force to work on future jobs and create 500 new professions by easing regulations, introducing new licenses and developing new markets.  Spine orthodontists and veterinary nurses are examples of those professions. 

The government will also revise regulations which can obstruct industrial convergence, reinvigorate training needed to work in converged industries, and create jobs in a new converged industry. 

SMEs

Similar or overlapping SME support will be restructured into one designed to promote employment.  There will be preliminary analyses and adjustments of SME budgets* from 2014. 

* A total of 1,124 SME support projects are currently run by 13 ministries and 16 local governments. 

Publicly invested research centers will be obliged to share their R&D outcomes with SMEs, and to invest a certain amount of publicly invested fund in SME related projects.  The government will facilitate SMEs’ growing into leading enterprises through measures* designed to constantly remove obstacles SMEs face in their ways to leading medium-sized enterprises. 

* The government will unveil in June the Measures to Provide a Ladder to Help SMEs Grow into Leading Enterprises

Foundations for cooperation between large enterprises and SMEs will be laid as there will be fast adjustments for SME appropriate business items and expansion of outcome sharing. 

Service Industries

The government will ease key regulations in the medical service, education and healthcare sectors and make public sector information accessible, in order to promote the development of high value added service industries.  The service sector R&D investment will be doubled by 2017. 

Convergence in the cultural sector will generate creative jobs in five new areas: i) ICT and content convergence, ii) culture, tourism and sports, iii) space information technology, iv) 6th industry based on agriculture, v) medical and welfare services.  Employment in the five areas will be strictly managed, and the employment effect will be evaluated according to the goals of each ministry. 

2) Family-friendly Work Environment by Innovating Working Hours

Working hour innovation covers reducing long working hours and introducing flexible working hours, in order to create family-friendly work environment and generate quality part time jobs. 

To meet the target of 1900 working hours by 2017, extra working hours are obliged to include hours worked in holidays, and industries exempt from the working hour regulation will be adjusted.  Pay systems of office workers will be revised to discourage working extra hours, and unused holidays will not be paid.

The government will actively help expand quality part time jobs, which meet personal requirements, such as education, childcare and gradual retirement, guarantee basic social security, such as minimum wages and the 4 basic insurances, and provide employment security. 

The public sector will offer part time permanent positions for the first time in its history.  Part time positions will be made available for newly introduced jobs and all jobs that can be instantly filled by part time workers.  The government will prepare a legal foundation to employ part time permanent teachers. 

In the private sector, rights to require reduced working hours according to one’s life cycle will be legally guaranteed.  Enterprises creating quality part time jobs will temporarily receive tax and social security incentives.  Mothers can require reduced working hours for one year in addition to the one year maternity leave.  There will be government financial support for part time substitutes of up to two, who replace those taking maternity leave.

Laws will be enacted to protect part time workers and promote part time employment.

The government will gradually increase the number of the Smart Work Centers to promote flexible working; public employees are able to work at the closest Smart Work Center from their home.

3) Females, Youths and Old Aged Adults All Participating in Job Markets

The government will help increase job market participation by removing obstacles and supporting employee-specific programs.

Connecting Employment with Welfare

The government will reform the National Basic Living Security Entitlement System into a system which provides more benefit to those working, while expanding self-sustenance and rehabilitation benefit recipients to those earning 50 percent of the median income.  To receive the benefit, participating in self-sustenance and rehabilitation programs is mandatory, and negligent participants will not be made eligible for the benefit. 

There will be employment service for the social security benefit recipients, and the existing employment service package will be improved to enhance recipients’ capabilities to work.  Supports to help females with returning to work include various programs, such as consultation designed to develop abilities to adapt to jobs, house work and childcare services, and programs to make them experience work place situations in advance. 

The government will launch a gateway, a center to provide on-the-spot employment and welfare services, to help the working poor and economically inactive population.  The government will also increase the number of professional consultants at public employment centers.  Private employment services will be promoted as its operation will be made possible without getting a license. 

Females

Childcare leave, public daycare service and daycare service at work place will be greatly improved.

Childcare leave will be allowed for mothers with a child younger than 9 years old, and companies will be obliged to offer childcare leave in addition to maternity leave.  Mothers will be able to apply for childcare leave at the time when they apply for maternity leave, and this will help make childcare leave a usual practice. 

A database for maternity leave substitutes will be reinvigorated, and the government will provide financial support for maternity leave substitutes. 

Daycare service at work place will be subject to relaxed regulations, and public daycare centers will cover 30 percent of total daycare children by 2017.  

The government will announce measures in June to create jobs in the social service sector and develop the social service sector into an industry, along with a guideline to improve the quality of social services, in particular care-giving service.  The measures and guidelines will be a foundation to create as many as 250,000 jobs in the social service sector, and contribute to increasing female employment

Youths

The government, taking into consideration shrinking youth population, will run programs to encourage youths’ early entrance into job markets.  The system of learning at work place will be introduced, which will mix on-site training with academic lecturing, and the government will enact laws to support the system.  

Working scholarships and the SME Hope Ladder Scholarships will be expanded, and work experience can be transferred to college credits, all of which will strengthen a link between work and higher education.

The government will operate a government-wide task force to reduce employment supply/demand mismatch between youths and SMEs.  The task force will discuss increasing support to improve SME employment conditions, higher incentives for long term employment in SMEs, establishing comprehensive SME employment information system for youths and developing labor force management system by region.

Old Aged Adults

The roadmap for the age group is aimed at fixing the baby boomer retirement age at 60 and building a system to support the post-retirement life.

The government will provide support for a delay in retirement in order to early adopt 60-year-old retirement, and conducting a survey on retirement ages and wage systems.  

Those 50 years or older will be given rights to require reduced working hours, which is expected to help them make plans for life after retirement.  Related ministries will jointly work on building a system which will help design post retirement life, and the system will cover mentoring service, job training, reemployment service. 

The senior work force can be utilized in the agriculture and fishery industries, which suffer from a labor shortage.

4) Strengthened Support for Those Less Protected

Laws related to contract and dispatched workers will be revised to introduce heavy financial compensation for punishment purposes.  The public sector will continue to work on transferring temporary positions to permanent positions for regular jobs.  The government will increase protection for contract workers and those without the unemployment insurance and industrial accident compensation insurance, for example those engaging in delivery service or tutoring.

Cooperation Required among Government, Industry and Labor

The roadmap will require cooperation among government, industry and labor.  The tripartite agreement reached on May 30 is expected to be a strong driving force to reach the 70 percent employment.  The government will strengthen the role of the government-industry-labor committee and restructure the system of the committee in order to continue to discuss in detail tasks to create jobs. 

Local governments will be obliged to publicize job creation targets from next year, and corporate job creation indices will be made accessible.

Plans for the Future

The roadmap will be carried out flexibly as the Rolling Plan, which makes adjustments every year.  The Office for Government Policy Coordination will regularly review the proceedings of the roadmap.

Expected Effects

The employment increase is projected to gain speed from 2015, following the establishment of policy foundations including laws and regulations in 2013-2014. 

Female employment is expected to greatly improve, particularly led by those returning to work, while youth employment is projected to jump by more than 7.3 percent points. 

Of the 2.38 million newly created jobs, 1.63 million are likely to be produced in the creative economy section, such as the culture, science & technology and health & welfare areas. 

Part time jobs are projected to account for 38.7 percent of the total jobs increased.